SEC charges Panasonic $143 million for FCPA and fraud violations

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The SEC has handed Japan-based Panasonic Corp a demand of $143 million for charges including bribery and cooking the books.

Japan-based Panasonic Corp. will pay more than $143 million to resolve charges of Foreign Corrupt Practices Act (FCPA) and accounting fraud violations involving its global avionics business. The charges brought by the Securities and Exchange Commission (SEC) include bribery and cooking the books.

Bribery charge
The SEC order states the firm’s US subsidiary, Panasonic Avionics Corp. (PAC), a provider of in-flight entertainment and communication systems, offered a lucrative consulting position to a government official at a state-owned airline to induce the official to help PAC in obtaining and retaining business from the airline. At the time it orchestrated the bribery scheme, PAC was negotiating two agreements with the airline valued at more than $700 million. PAC ultimately retained the official and paid approximately $875,000 for a position that required little to no work, using an unrelated third-party vendor to conceal the payments.

Fraudulent accounting
The SEC’s order also found that Panasonic fraudulently overstated pre-tax and net income by prematurely recognising more than $82 million in revenue for the fiscal quarter ending June 30, 2012. The fraud was accomplished by PAC backdating an agreement with the airline and providing misleading information to PAC’s auditor. The SEC order further found that Panasonic lacked sufficient internal accounting controls and failed to make and keep accurate books and records in connection with purported consultants retained by PAC, as well as sales agents used to solicit business from state-owned airlines and other customers throughout the Middle East and Asia. Panasonic consented to the SEC’s order finding that it violated the anti-bribery, anti-fraud, books and records, internal accounting controls, and reporting provisions of the Securities Exchange Act of 1934, and ordering it to pay approximately $143 million in disgorgement and pre-judgement interest.